Spending Money on Happiness

4 smart ideas to help you find yourself and financial bliss

You've heard it before: If you want to be happier, spend money on experiences — say, dinner at the new Mario Batali joint or a trip to Vancouver — rather than on things. But memory-building activities can't completely replace stuff. Objects can enable experiences, the way new outdoor furniture can inspire summer cookouts and camaraderie. To best use your limited riches to combine experiences and material goods, try these four smart ideas from specialists in financial psychology.

3 Free Ways to Get Happy

1. Revel in good smells
Mood-elevating scented candles are great but expensive. "You don't have to buy anything," Rubin says. "You can smell fresh laundry."

2. Say hello
We get lazy about acknowledging the people we love. Exchanging simple greetings, says Rubin, "totally changed the atmosphere in my home."

3. Suffer for 15 minutes a day
Faced with an unwelcome task? Tackle a bit of it at a time. You'll get lasting relief from attacking a chore.

Know what you treasure most

The things in life we value usually fall into one of four categories, says Lois Vitt, Ph.D., founding director of the Institute for Socio-Financial Studies. If you're a personal-values person, you're happiest spending on yourself. A wardrobe boost might do the trick. If you're a social-values person, buying gifts for friends and family improves your spirits. If you're driven by what Vitt calls physical values, you enjoy getting things that engage the senses ( like a new bike or a luxuriously renovated bathroom). Finally, if you're driven by financial values, you relish money in its purest sense, from saving and investing it to getting good deals. Figure out your desires and spend accordingly.

Bigger isn't better

Use your money for a variety of less expensive purchases, instead of one giant one, says University of Texas psychology professor Art Markman, Ph.D., author of Smart Thinking. "Sitting in the balcony of a great concert series eight times a year is better than one blowout evening where you sit in the front row," he says.

Don't go overboard

Nothing kills happiness like bouncing a check. Overspend and you'll be trading short-term pleasure for long-term anxiety, Markman warns. So take care of your needs (your monthly bills and retirement-savings obligations) before you spend on anything frivolous. As for experience being the best thing to buy, Vitt thinks the recession has dulled that trend: "Particularly for people 50-plus, there's much more of a longing for certainty and stability." That can mean using money by not using it but instead multiplying it.

Pay down your mortgage

If you're still searching for joy, consider lightening what's probably your biggest financial burden. Getting closer to kissing the bank good-bye offers tremendous psychological benefits. "Older Americans, in particular, are happiest when they own their homes," Vitt explains. "If you feel secure in your home, you feel more secure in life."